U.S. and Canadian stock markets look unattractive for the next two years. Valuations across major indices on both sides of the border are stretched far beyond long‑term averages. A decline of roughly 30% would be needed just to normalize valuations, and periods of extreme overvaluation often lead to equally extreme corrections — meaning a 40% drop from recent highs is not impossible.

Beyond weak consumer conditions, politics are now one of the largest drivers of investment outcomes. Canada is particularly vulnerable because the United States is by far our largest trading partner. When Canadian policy direction conflicts with U.S. economic priorities, the impact is disproportionately felt here. Since 2015, federal policies have constrained resource development, discouraged capital investment, and contributed to the erosion of what was once one of the strongest middle classes in the world.

Concerns also extend to media financing, limits on open debate, and the broader relationship with China — all of which shape investor confidence. When political leadership restricts key industries and undermines competitiveness, the country cannot reach its economic potential.

Given this environment, it makes sense to limit Canadian exposure to blue‑chip companies with substantial U.S. operations — particularly in pipelines and energy. Bank valuations remain difficult to justify, and geopolitical risks add another layer of uncertainty. Outside of a few major names, Canadian equities may not offer attractive risk‑adjusted returns until both valuations correct and political conditions stabilize.

Recently, I reduced my positions in Bank of Nova Scotia and Suncor, while increasing holdings in Enbridge and Berkshire Hathaway Class B. My cash position now represents 40% of my portfolio.

Canada has world‑class opportunities, but we are not capitalizing on them. The country’s economic trajectory will continue to suffer until policy direction shifts toward competitiveness, investment attraction, and strategic alignment with our largest trading partner.

Elbows-Up Economics

Next to a horrible jobs report, according to Statscan, hourly pay increased by just 2% year-over-year to an average of $37.02. This marks the slowest rate of wage growth in Canada in nearly a decade, excluding the pandemic.

Are Liberals going to wake up anytime soon?

Liberals, not Trump, are our downfall.

I know many Canadians would love for Trump to be the reason for our downfall but he isn't. Liberal voters are.  There is simply no way of hiding it. If there was, Carney would have by now. 

The U.S. certainly needs many of our goods. Mainly resources which most have little to no tarriffs. Some tarriffs, such as on softwood lumber have existed long before Trump. But, as far as manufactured goods are concerned, much of Canada's 12% share of what the US imports can easily be replaced. This is the sector that Trump is targeting and in a few months it will begin to show up in the data. Hopefully, Liberal voters will not continue to applaud Carney Marx for failure as the economy crumbles around them. 

Sadly, it is our own fault for allowing Carney Marx to walk away from negotiations. Especially since there are zero legite reasons for him to do so.  If there were such reasons, why has he not shared them? Even the US is dumbfounded by his actions since they gave us the best agreement out of any country. It makes zero sense.